Jason Chen's sloppy iPhone breakdown damaged the prototype and may have added vandalism to the list of pending charges against him and other Gizmodo staffers. (Source: Gawker Assets)

Vandalism and sale of trade secrets are two of the top charges that may be leveled against Gizmodo's staff

Gizmodo/Gawker
employees Brian
Lam and Jason
Chen are embroiled in a mess over the fourth generation
iPhone that they purchased and then tore apart. Lam and Chen
contend that the iPhone was merely lost and that they are innocent.
Apple, however reported the phone stolen.

Documents concerning
the case and the search
of Chen's house have been released in the form of an
affidavit pertaining to the search of Chen's home. The
damning summary of the case comes on page 12, which reads:

Suspect
Brian Hogan found or stole a prototype iPhone 4G that was
accidentally left at a restaurant by Apple employee Robert "Gray"
Powell. Hogan identified the owner of the phone as Apple Engineer
Gray Powell through the contents of the phone and through Internet
searches. Rather than return the prototype phone to Powell and/or
Apple, Hogan subsequently sold the iPhone Jason Chen in Fremont for
$5000. Upon receiving the stolen property, Chen disassembled the
iPhone, thereby causing it to be damaged. Chen created copies of the
iPhone prototype in the form of digital images and video, which were
subsequently published on the Internet based magazine Gizmodo.com.

It's
will be mighty hard for Gizmodo to dispute that,
except perhaps for the phone's status being stolen. However,
Apple had reported the lost phone prototype stolen
before Gizmodo found it.

Gizmodo's
writers appear to have not been truthful about at least one
significant detail of the incident. In their coverage they
claimed they bought the prototype for $5,000. According to
multiple accounts the real total was close to $10,000.
Detective Matthew Broad describes in the affidavit an interview with
Katherine Martinson, roommate of Brian Hogan, the man who found and
sold the phone:

Martinson
said Hogan later showed her a camera box that contained $5000.00 in
$100 US Treasury Notes. Hogan told her that the money was a result of
selling the phone to Jason Chen. Martinson said Hogan told her he
has received a total of $8500.00 the sale of the
phone, but she is not sure of the source of the additional $2500.00.
Martinson said Hogan also told her that he will receive a cash bonus
from Gizmodo.com in July if and when Apple makes an official product
announcement regarding the new iPhone.

(Note:
There seem to be some discrepancies in Detective Broad's numbers, he
probably meant $5,000 and $7,500; not $5,000 and $8,500. The
take home message, though, appears to be that Gizmodo paid more than
the $5,000 they claimed.)

The affidavit also reveals:

Martinson
said she and other friends attempted to talk Hogan out of selling the
iPhone prototype on the basis that the sale would ruin the career of
Robert "Gray" Powell (Apple engineer who lost the
phone). Hogan's response to her was that it, "Sucks for
him. He lost his phone. Shouldn't have lost his phone."

It
also reveals that Hogan had an accomplice -- his roommate Thomas
Warner. Warner, who has a misdemeanor history, helped Hogan try
to destroy evidence of the phone. States the report:

Based
upon the fact that Warner directly assisted Hogan with the removal
and concealment of evidence directly related to this case, I believe
it is highly likely that Warner was involved and or conspired with
Hogan in the negotiation and subsequent sale of the prototype iPhone
and that his efforts to conceal and or destroy the evidence
as an indication of his consciousness of guilt. I also know that
cellular devices like BlackBerries and iPhones function as small
computing devices and that they maintain large quantities of data
which include, but are not limited to call logs, email
communications, system logs, GPS logs, text messages, applications,
and Internet browsing history. Additionally, based upon my training
and experience, I know that continued use of the devices can result
in the deletion of data and or potential evidence on the phone.
Therefore, I seized the items as evidence.

Unfortunately,
Warner and Hogan's attempts to hide or destroy the evidence were
largely for naught, as the pair apparently had a change of heart and
directed police to the evidence they had ditched. The ditched
items include stickers that identify the phone as an Apple prototype,
a camera memory card, a USB memory stick, and a computer.

The
affidavit also contains part of the email exchange between Brian Lam
and Steve Jobs, in which Lam demands a letter of authenticity for the
phone's safe return. Jobs complied with the demand, according
to the affidavit.

The affidavit indicates that Chen and/or
others at Gizmodo will
likely be charged with receiving stolen property, vandalizing private
property, and sale of trade secrets. Even if they can escape
the claim that they bought stolen property, they will be particularly
hard pressed to fight the vandalism charge, as it is obvious they
damaged the expensive prototype.

The seller Hogan may be
charged with felony theft and or sale of trade secrets as well.
And his friend Warner may be charged as an accomplice to these
actions They may find it hard to prove their innocence, given
the fact that they tried to destroy evidence of their actions.

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This article is over a month old, voting and posting comments is disabled

We hashed over this last time. California law is quite clear about this. If you find lost property, you have to make a good faith effort to return it to the owner, or the establishment where you found it (so they can try to track down the owner). If you can't do that, you have to turn it over to the police (after some period of time, if it's unclaimed, it becomes yours). If you don't do these things, which appears to be what happened in this case, the item is considered stolen.

While it's in your possession, you'd be free to take pictures of it and (if you were really careful) probably disassemble it. If these guys get good lawyers, they might be able to get off arguing that Gizmodo simply paid for the rights to access, photograph, and handle the phone. But from everything I've read it sounds like they bought the phone, which makes it trafficking in stolen goods.

Mind you I'm not happy that Apple was able to use its legal clout to get a police raid of Gizmodo's office, when the police took over a day to send someone to investigate a burglary at my dad's office. But legally, Gizmodo is on very shaky ground.

quote: Hogan reached out to several publications and websites “in an attempt to start bidding for the iPhone prototype,” according to Broad. “Martinson said Hogan understood that he possessed a valuable piece of technology and that people would be interested in buying it.”

Martinson said she and other friends tried to talk Hogan out of selling the prototype, arguing it would ruin the career of the Apple engineer who lost it, Broad said in the affidavit. “Hogan’s response to her was that it ‘Sucks for him. He lost his phone. Shouldn’t have lost his phone.’”

Gizmodo Bonus Hogan was to receive a cash bonus from Gizmodo in July if and when Apple makes an official product announcement about the new iPhone, Martinson said, according to Broad’s affidavit.

I know the irrational hatred Apple engenders, but I really don't understand how anyone can condone this sort of behavior.

Yeah, I just can't understand the obvious anti-Apple bias that's out there. It cannot be rationally denied that they design very good products, and the market very much agrees. They have made a huge impact on the direction mobile devices have taken, and society as a whole has benefited. They have every right to charge as much as the market is willing to pay for their designs, because this profit margin basically defines the value Apple creates. I don't know if the Apple haters are basically Marxist socialists who don't believe in a free enterprise society, or are just personality types that envy and hate other people's success.

I agree that Apple has changed the entire playing field with the iPhone. But I think the resentment stems from a few reasons.

1. The Draconian controls that Apple bakes into its products.2. The "Fischer Price" technology experience that attracts 14 y/o teenagers to buy an iPhone as a fashion, texting/phone device. Similar to a compact held in purse.3. The Apple smug factor that draws it's lemmings to a product mostly due to campy ignorance rather than technological edge.